And remembering another historic election 50 (ph) years ago this week.

Plus, the Sunday funnies.

LETTERMAN: That's where our kids will live, the future, Republicans and Democrats working together. We're screwed.

(END VIDEO CLIP)

ANNOUNCER: From all across our world to the heart of our nation's capital, ABC's "This Week" with Christiane Amanpour starts now.

AMANPOUR: Hello again, everyone.
After Tuesday's election, Republicans have the largest House majority since the late 1940s during the Truman administration. What they do with that majority and whether Democrats and Republicans will work together is our focus this morning.
ABC's John Donvan starts us off.

(BEGIN VIDEOTAPE)

DONVAN (voice-over): Listen and see if you can pick out -- and it's going to be easy, actually -- the hottest, hippest word of the week.

(UNKNOWN): Well, it was a historic election.

(UNKNOWN): A historic...

(UNKNOWN): ... historic...

(UNKNOWN): ... historic...

(UNKNOWN): ... historic night.

(UNKNOWN): ... historic...

(UNKNOWN): ... historic election.

DONVAN: You got it. What we saw in this election, a president who took a shellacking...

OBAMA: I'm sure there are easier ways to learn these lessons.

DONVAN: ... a GOP that gets to gloat again, just careful not too much...

BOEHNER: This is not a time for celebration. It's a time to roll up our sleeves and go to work.

DONVAN: That outcome made this election -- oh, here we go again...

(UNKNOWN): ... historic opportunity here...

DONVAN: Yes, historic.

(CROSSTALK)

DONVAN: Or maybe not. Simply put, history is the writing down of what happens, and a lot of things happened, happened even last week. Giants over Rangers to take the Series in five, it happened, but was it historic? Maybe if you live in the Bay Area.
For the rest of us, though, historic is defined by what gets remembered long afterward, for changing what followed, like Susana Martinez, the Republican who won the governor's race in New Mexico Tuesday.

BLITZER: She's a Latina, and so this is historic in New Mexico.

DONVAN: Yes, Wolf, that was arguably historic. No one could achieve that first ever again. But the mere fact of the GOP capture of the House -- here is the chart, the 60-plus seats they took from the Democrats -- it's a lot, but it's not a record-breaker.
The thing is, we really need to know what the Republicans ultimately do with their win to see what will really change. 1994, when they swept both houses, then something changed. They came in with clear ideas. They were listed in their Contract with America. They said they were going to work with the Democratic president.

(UNKNOWN): We can only have president at a time. It's President Clinton. And we know that we need to work with him where we can.

DONVAN: And what they got was, after a fair amount of struggle, a Democratic president to declare...

CLINTON: The era of big government is over.

DONVAN: ... welfare reform. We have never been the same, and both sides had a hand in it. This time, the main GOP idea is not Obama, not his policies...

MCCONNELL: The only way to do all of those things is to put someone in the White House who won't veto any of these things.

DONVAN: So is that the mindset that is going to make things happen in Washington that will prove that this election in the end was as historic as everyone said it was on night one?
For "This Week," John Donvan, ABC News.

(END VIDEOTAPE)

AMANPOUR: One of those aiming to make history is Rand Paul, senator-elect from Kentucky, and he joins me this morning.
Welcome. Thank you for being here.

PAUL: Good morning.

AMANPOUR: In a way, it is, to coin a phrase, historic. There's never been a Tea Party in modern American history, and you are one of the prominent Tea Partiers. What is your first aim once you get to -- to the Senate?

PAUL: I think the debt. We have to do something about the debt. I think we've been fiscally irresponsible for a generation or more here. And the one thing about the Tea Party that's interesting is, it really is equal parts chastisement to both parties. You know, Republicans doubled the debt when we were in charge, and then Democrats are tripling the debt.
And I've said this over and over again. It's not about political party, but it is about fiscally trying to do something to balance our budget.

AMANPOUR: Well, we've all seen and we followed the campaign, and there was a lot of talk, a lot of slogans and platitudes about cutting the debt, balancing the budget, cutting the deficit. But there has not been any direct information on how you're going to do that, no specifics. It was fairly content-free, the platform.
So where are you going to cut in order to make a meaningful change?

PAUL: Well, some of it has to be procedural, in the sense that we need to balance our budget by law. If you force legislators to balance, at the end of the day, if it has to be balanced, then they step up and they become legislators and can find out where to cut.

AMANPOUR: So you're going to move for a balanced budget amendment?

PAUL: Absolutely. Absolutely. And short of that, we need a rule -- it takes a while to get an amendment to the Constitution -- let's have a rule that -- let's obey our rule. They passed pay-as-you-go, and they break it in the first three weeks they have it. So we need rules.

AMANPOUR: OK.

PAUL: And we need to obey the rules. The second thing you need is -- and I don't see things in terms of political party, so I think this can be something where I can work across the aisle -- but the second thing you need is a compromise on where the spending cuts come from.
Republicans traditionally say, oh, we'll cut domestic spending, but we won't touch the military. The liberals -- the ones who are good -- will say, oh, we'll cut the military, but we won't cut domestic spending.

AMANPOUR: All right. Well, let's ask you.

PAUL: Bottom line is, you have to look at everything across the board.

AMANPOUR: All right. Where, then? Military? Would you cut the military?

PAUL: Yes. Yes.

AMANPOUR: By how much? Obviously, Robert Gates has made some suggestions.

PAUL: Well, I think it's hard -- it's hard to give exact numbers, but I think one thing that's concerning -- you know, recently, Admiral Milliken (ph) said that the interest on the debt now is going to approach in the next couple of years -- just the interest on the debt -- will approach what we spend in the national defense budget. So, I mean, that should alarm us all. Bernanke says the debt is unsustainable. We need to do something about it.

AMANPOUR: The question, again, is, exactly what? Because, again, the Republicans in the campaign have come up with $50 billion here, $100 billion there, a lot to you and me, but in terms of reducing a $1.3 trillion deficit, how does the math add up?

PAUL: It has to be...

AMANPOUR: Are you going to cut entitlements?

PAUL: It has to be everything across the board.

AMANPOUR: Entitlements?

PAUL: And you -- you have to look at entitlements.

AMANPOUR: Social Security?

PAUL: What I would say is not the people who are currently on it and not those approaching retirement, but the sooner we fix it, the better. So it may be 55 and under, but that should be this year. We should look at 55 and under, what do we do to change the system to make it more sustainable?

AMANPOUR: Raise the retirement age?

PAUL: You may have to. You may have to. They're already talking about it. I mean, there's a bipartisan commission up here talking about raising age, graduating the benefits, maybe having means testing. You have to look at all of these things. They need to be on the table.
But what you have to get to get there is you have to take it out of campaign mode.

AMANPOUR: Exactly.

PAUL: You know, everybody in the campaign mode, how long have we been running Mediscare ads? Democrats have run against Republicans for years saying we're going to take away your grandmother's Social Security. We're not going to do that.

AMANPOUR: All right.

PAUL: But we need to fix it, because we have too many people retiring.

AMANPOUR: What about health care? All candidates were saying we had to repeal health care, yet the American people did not say that in this election: 47 percent said repeal; 48 percent said no.

PAUL: Well, it depends on -- depends on where you look. You look in Missouri, 70 percent voted to get rid of Obamacare.

AMANPOUR: But just across -- across the board, is that what you're going to do?

PAUL: In Kentucky, 70 percent of the people would like to repeal it or have our attorney general challenge the constitutionality of it. I think there are some real constitutional questions. It's going forward. A federal judge in both Florida and Virginia have said, yes, we're going to go forward with this. So I think you will see that go forward and we will challenge it in the courts. And also we should try to repeal it.

AMANPOUR: Let me ask you this in terms, again, of balancing the budget. There are many economists who simply say the math does not add up if you're not going to agree to raising taxes. Do you agree that taxes will have to be raised, as well?

PAUL: Well, I think it's not a revenue problem; it's a spending problem.

AMANPOUR: But it is a revenue problem, according to so many economists.

PAUL: Well, yes and no. I mean, we bring in -- the thing is, is that a lot of times people would come to me and say, well, you don't believe in any government. And I would tell them, you know what? I believe in $2.4 trillion worth; I just don't think you can have $4 trillion worth if you only bring in $2.4 trillion.
2.4's a lot. That's a huge government. We've doubled the size of government in 10 years.

AMANPOUR: But...

PAUL: We don't need bigger government. We need to shrink the size of government.

AMANPOUR: Right, but without making strong entitlement and other cuts -- and even if one does, most of the economists say the math simply doesn't add up to keep -- to keep tax cuts on and on and on. Will you agree to some?

PAUL: My -- my hope now -- my hope is to be on the Budget Committee and to go through all of these numbers and, by January, to have a balanced budget that I will introduce. I want there to be a Republican alternative -- whether it wins or not, I want the Republican message to be one of balanced budgets.
If they won't do it in a year, we'll say, how about two years? If they won't do it in two years, how about three years? But someone has to believe it.

AMANPOUR: Give me one specific cut, Senator-elect.

PAUL: All across the board.

AMANPOUR: One significant one. No, but you can't just keep saying all across the board.

PAUL: Well, no, I can, because I'm going to look at every program, every program. But I would freeze federal hiring. I would maybe reduce federal employees by 10 percent. I'd probably reduce their wages by 10 percent. The average federal employee makes $120,000 a year. The average private employee makes $60,000 a year. Let's get them more in line, and let's find savings. Let's hire no new federal workers.

AMANPOUR: Pay for soldiers? Would you cut that?

PAUL: I think that's something that you can't do. I don't think...

AMANPOUR: You cannot do?

PAUL: Right. I think that soldiers have to be paid. Now, can we say that gradually we don't need as large of an Army if we're not in two wars? Yes, I think you can say that. You can save money there. You can bring some troops home or have Europe pay more for their defense and Japan pay more and Korea pay more for their defense or bring those troops home and have savings there.

AMANPOUR: Have you thought much about foreign policy? Does the Tea Party have a foreign policy?

PAUL: I think the Tea Party believes in a strong national defense, that it's a priority for our country, that the Constitution exemplifies and says that national defense is one of our priorities.
But, no, primarily the Tea Party is about the debt. It's concerned and worried that we're inheriting or passing along this debt to our kids and our grandkids, is the number one thing of the Tea Party.

AMANPOUR: So, again, to talk about the debt and to talk about taxes, there seems to be, again, just so much sort of generalities, for want of a better word.

PAUL: Right.

AMANPOUR: And, for instance, there are many people...

PAUL: Well, the thing is that you can call it a generality, but what if -- what if I were president and I said to you, "Tomorrow, we're going to have a 5 percent cut across the board in everything"? That's not a generality, but there are thousands of programs.
If you say, "Well, what are all the specifics?" There are books written on all the specifics. There's a book by Christopher Edwards, downsizing government, goes through every program. That's what it will take. It's a very detailed analysis.
But you need to ask of every program, when we take no program off the table, can it be downsized? Can it be privatized? Can it be made smaller?

AMANPOUR: And what about earmarks? Would you say no to earmarks?

PAUL: No -- no more earmarks.

AMANPOUR: No more? Not even in your state?

PAUL: No. No. But I do tell people within Kentucky is I say, look, I will argue within the committee process for things that are good for Kentucky that they want and also within the context of a balanced budget.
Here's what happens. You go to the Transportation Committee and they say, "What do you want?" But it should be, "How much do we have?" No one asks, "How much do we have?" So we just spend it. And then, at the end of the day, if we don't have it, we either print it or borrow it. Those are bad things.
There is no restraint, but that's why you need rules. In Kentucky, we have a balanced budget amendment. We have to balance our budget. So they have to be better legislators.

AMANPOUR: One of the emergencies is going to be voting to lift the debt ceiling.

PAUL: Right.

AMANPOUR: Would you do that?

PAUL: I don't believe I will vote to raise the debt ceiling.

AMANPOUR: You won't?

PAUL: No. I think that we need to send a message -- we need to send a strong message that...

AMANPOUR: The government would default, then.

PAUL: Well, only if we won the vote, would they default.

AMANPOUR: So you think it won't pass?

PAUL: You know, I think it's unlikely. There are people who vote against the debt ceiling every time to send a message that adding more debt is wrong. I think we shouldn't add more debt. I think we should immediately start cutting spending.
We should have a freezing hire. We should not spend any more of the stimulus money that's unspent, the TARP money that's unspent. You know, we need to get our fiscal house in order.
But bigger than the specifics is a rule. Congress does not obey their own rules. This is what -- you want to know where the Tea Party is, why we're unhappy? We're unhappy because they pass pay-as-you-go and, in the first three weeks, they say everything's an emergency and they evade their own rules. That's a problem.

AMANPOUR: Right. Well, let me -- let me ask you about some of the challenges you might face from within your own party. Do you expect to be welcomed with open arms by the establishment Republicans? Trent Lott, former senior leader of the Republican Party, said when you get to Congress, they've got to co-opt you.

PAUL: Well, I think the interesting thing is...
AMANPOUR: Are you co-optable?
PAUL: No, but I think the Tea Party actually is co-opting Washington. You look around you...

PAUL: That's coming from our movement. Absolutely. And I told you where the compromise is. The compromise is, Republicans never say they'll cut anything out of military. What I say is, national defense is the most important thing we do in Washington, but there's still waste in the military budget. You have to make it smaller, but you also then need to address, how many wars are we going to be involved in? Are we going to be involved in every war all the time?

AMANPOUR: Afghanistan? Are you going to call for early withdrawal there?

PAUL: We have to -- we need to have a debate over it.

AMANPOUR: Would you?

PAUL: We need to have a debate over it.

AMANPOUR: But the president has a timetable. Do you disagree with that?

PAUL: Right. What I think is that ultimately troop deployments are decided by the president, not by Congress. I don't think really Congress can decide troop levels. In fact, I think if Congress told him to bring all of them home on a certain time, I think he can do what he wants constitutionally.
But what I would say is, we need to have a debate in our country, in our Congress over, is our national security still threatened by Afghanistan? Do we need to be there? Do we need to be there in a large...

AMANPOUR: Do you think so?

PAUL: Well, do we need to be there? I want to ask these questions. Some of them I don't know all the information yet. But what I would say is, do we need to be there in a large ground -- ground war? Or could we be there on a smaller base and have the Afghans -- after 10 years...

AMANPOUR: Well, that's the debate that's going on right now, in any event.

PAUL: Well, after 10 years, I think the Afghans need to have stepped up more to do more. And if you ask our G.I.s, when I asked them from Kentucky leaving the base, I say, "Are the Afghans stepping up enough? Would you rather the Afghans do more of the patrolling on the streets?" Every one of these young brave men and women will tell you, "Yes."
So the mood is changing, even within those who are the brave young men and women that are serving our country.

AMANPOUR: Will you ratify the START treaty?

PAUL: I think we need to have more discussion on it, but it doesn't sound like that I'm probably going to be in favor of that.

AMANPOUR: It doesn't sound?

PAUL: We're going -- we're going to have a discussion about it.

AMANPOUR: Wouldn't it be a good thing to have more nuclear treaties with the Russians?

PAUL: Well, I mean, some of it has been good. I mean, some of it under George W. Bush...

AMANPOUR: That would save money, too, wouldn't it?

PAUL: ... under George W. Bush, we did reduce armaments. And I think you have to -- some of it is the devil's in the details there, and I need to know more about it before making an immediate decision.

AMANPOUR: Well, we hope to have you back, and we'll get more details from you next time.

PAUL: Thank you.

AMANPOUR: Senator-elect Rand Paul, thank you very much for joining us.

AMANPOUR: And the Bush-era tax cuts expire at the end of this year. If Congress doesn't extend them, taxes will go up for everyone. One man says that would be a good thing. David Stockman was the budget director for President Ronald Reagan. He criticizes his party for sticking with the tax cut mantra, and he joins us this morning.
Also, Congressman Mike Pence, a senior House Republican leader who takes the opposite view.
Welcome to both of you. Thank you for being here this morning.

PENCE: Thank you.

STOCKMAN: Thank you.

AMANPOUR: Let me first ask you, Representative Pence, you have stepped down, you're planning to step down from your leadership position. Are you running for president?

PENCE: Well, let me say, two years ago, I was asked to serve in a leadership position in the Congress, which after spending most of my career fighting runaway spending under Republican control was something as a surprise to many. But I took it because I thought we had an opportunity to lead our -- our party back to a majority.
And I took the job. I believed if we returned our party to the practice of conservative principles on Capitol Hill, we could win back the Congress. This week's historic victory for conservative values for the American people is an -- in my judgment, a fulfillment of my commitment.
And so now my family and I are going to take our time to prayerfully consider ways that we can serve our state and serve our nation in the years ahead.

AMANPOUR: Very quickly: Would you run for president?

PENCE: Well, look, we've been very humbled by the encouragement we've received back in Indiana and around the country. And we're intent on taking the coming weeks to really prayerfully consider that, to wait on the Lord, to seek counsel. And after the first of the year, we'll make a decision.

AMANPOUR: Or governorship?

PENCE: Well, we -- as I said, we've gotten...

AMANPOUR: So when can we hear your decision, after you've done all that consultation?

PENCE: Well, we frankly -- we've frankly been very humbled by the encouragement we've received back in our beloved Indiana and around the country, but we're going to take the holidays here. And as I said, we're going to reflect on it.

AMANPOUR: All right. Well, when you're going to...

PENCE: And our question will be, where can we make the most difference for what matters most to us? And what called me to public service back when the -- back in the Reagan administration, when I first ran for Congress, was...

AMANPOUR: We're going to ask you about that because...

PENCE: ... a commitment to conservative values.

AMANPOUR: ... because apparently Ronald Reagan was your political idol, so we'll ask you a little bit about that.

PENCE: Still is.

AMANPOUR: Still is, OK. Well, we're going to ask about his economic philosophy with the man who engineered it.
Well, so, David Stockman, former budget director, you have basically said that Tuesday gave voice and gave further voice to what you call the big lie.

STOCKMAN: Exactly. This is not 1981. This is not morning again in America. We've drifted now for 30 years.
Both parties, unfortunately, became free lunch parties, the Republicans cutting taxes every time they had a chance, never doing anything about spending, and the Democrats digging in to defend everything that was there. As a result, we now have this massive deficit.
Today, the gross public debt is $14 trillion. The first thing we did when we walked into the White House in 1981 was struggle with raising the public debt to $1 trillion. So in that 30 years, the public debt has gone up 14 times. Our economy is only four times larger. We're losing the race.
And we're now becoming the banana republic finance, printing -- the Fed, these mad men who are out of control at the Fed, are printing new money, equal to 100 percent of the debt that we're issuing each month. This will not end well. It's -- it's going to end in a disaster.

AMANPOUR: Right. And you're saying a tax increase and entitlement cuts are the only possible policy tools right now?

STOCKMAN: It's built into the math. I think, you know...

AMANPOUR: But this gentleman here is saying, no, correct? I mean, you don't want to cut any -- raise any taxes. You want to extend the tax cuts.

PENCE: Look, I don't think higher taxes are going to get anybody hired. I don't -- I think raising taxes in the worst economy in 25 years is a profoundly bad idea. But can I say what I agree with David on?

AMANPOUR: Go ahead.

PENCE: You know, I opposed the Medicare prescription drug entitlement. I opposed the Wall Street bailout. I opposed the stimulus bill. I -- I think this week's election was a historic rejection of American liberalism and the Obama and Pelosi agenda.
The American people are tired of the borrowing, the spending, the bailouts, the takeovers. So to that point -- I disagree with David strongly on any tax increase. But to his point...

AMANPOUR: But the math isn't there.

PENCE: ... both parties have failed the American people and have allowed this city to -- to -- to be -- to expand spending beyond any reasonable expectation...

AMANPOUR: But, sir, with all due respect...

PENCE: It's true.

AMANPOUR: ... what you just said was the campaign -- campaign slogan. Now it's time to legislate. You have a new Congress. You have a new reality. You have a huge budget deficit, a massive national debt.
And what I'm trying to figure out is, where, beyond what you've been saying in the campaign about, you know, less government, less spending, where you're going to make big cuts? And do you agree that there will, after a period of time, perhaps, need to be tax increases?

PENCE: Well, look, Republicans have put on the table -- and continue to put on the table -- our commitment to change the fiscal direction of Washington, D.C., to put our national government on a pathway toward a balanced budget.
The president yesterday called for a spending freeze. Well, we -- we think we ought to go back to pre-stimulus, pre-bailout levels and freeze there -- there's been an 84 percent increase in domestic spending since this administration took office. We've got to roll back there. That will save $100 billion in the first year. How about a net hiring freeze on Capitol Hill?
And let me anticipate -- David makes the point -- absolutely, for Americans under the age of 40, we've got to put everything on the table in the area of Medicare, Medicaid, Social Security. We have got to reform these entitlement programs. They are threatening the fiscal vitality of future generations of Americans.

AMANPOUR: Is that enough?

STOCKMAN: Well, no, not nearly enough. The point is, we're now in real-world governance. And you don't get 100 times at bat. The Republicans have been at bat for 30 years, and they've whiffed on everything.
Social Security needs to be means-tested right now, not for benefits in 2030, right now, for the top one-third of beneficiaries who have private income that they've earned over their lifetime.
We need to drastically scale back Medicare. And the Republicans expanded it. And I appreciate what Mike is saying, but there's no track record of a willingness to take on the doctors, the pharmaceutical companies, the scooter chair manufacturers, who are everywhere.
So we need to take on defense, OK? We are now at the point where this -- we're kind of at the, you know, sundown as an imperialist power. And we can't have credit card imperialism. We can't be the policemen of the world anymore because we can't afford it. We're going to have to cut defense drastically.
And that isn't just fraud, waste and abuse. It's force structure, fewer divisions.

PENCE: But let me...

(CROSSTALK)

AMANPOUR: Tell me...

(CROSSTALK)

STOCKMAN: And even if we do all that, we still have to raise revenue.

AMANPOUR: OK. Would -- you know, you heard Rand Paul say it wasn't a revenue problem, but you -- and you've also heard some economists saying that perhaps right now extending and -- and -- and increasing taxes in this crisis right now, immediately, might not be the most wise thing. What are you saying?

STOCKMAN: The crisis will be with us for the next 5 to 10 years. We've had a debt spree for 30 years. The economy has been badly injured. It is sunk under the weight of $50 trillion of debt that we've created publicly and privately.
The recovery is over. It was weak; it was tepid. What we have now is day-to-day, 1 percent to 2 percent growth, if we're lucky. And so therefore government has to focus on paying its bills and not micromanaging or simulating the economy.

PENCE: But the way we're going to put our fiscal house in order is you have to cut spending now. Everything has to be on the table. I've been battling against runaway spending under both political parties throughout my 10 years in Congress. That's a given.
But you can't balance the budget on 9.6 percent unemployment. You can't balance the budget on a struggling economy. The last thing we should do is allow a tax increase on job creators in this country to take effect in January or, as David suggests, a tax increase on every American. And let me take one point...

AMANPOUR: What will happen when Congress comes back in lame-duck? What will happen with this tax battle...

(CROSSTALK)

PENCE: Before we get -- look, David Stockman is, you know, he's a really famous guy and a thoughtful guy. I just disagree with him vehemently and I, frankly, have for about 30 years.
David believes that every tax increase equals a revenue increase, but that's not true. Anybody who is familiar with the historical data from the IRS knows that raising income tax rates will likely actually reduce federal revenues.

AMANPOUR: Let me ask David...

PENCE: So if we raise taxes, the American people are very likely going to -- the top 1 percent are going to send less money to Washington, D.C., and that will never get us out of this...

(CROSSTALK)

STOCKMAN: I just have to respectfully disagree. You will have some loss of revenue because some activity or transactions won't happen, but if you raise taxes on paper by $100 billion, maybe you'll get $90 billion or $85 billion. But it's just common sense fact that, when you raise the rates, you get more revenue.
Normally, it's a bad thing to do. But we are in such dire shape that we have no choice but to accept the negative trade-off of some harm to the economy to start paying our bills. Otherwise, we're dependent on the Chinese, we're dependent on OPEC, we're dependent on a bunch of hedge fund guys to buy our debt, and this game is about over.

AMANPOUR: And, Congressman Pence, you talked a lot about the...

PENCE: Raising income tax rates on the top 1 percent will not increase revenues to the federal treasury.

AMANPOUR: Well, not -- not according to -- to the budget director, who is the architect of the biggest, most sweeping tax cuts in American history. But the question I have for you is, what about all that -- you know, you all talk about the middle class. But the middle class, we've seen their incomes stagnant, whereas the huge amount of wealth has been accumulated by a very, very small top percent. It's not fair, is it? Is it?

PENCE: Well, look -- look, what's not fair is the idea that, at a time when tens of millions of Americans are unemployed or underemployed, that you would actually allow a tax increase on job-creators, a tax increase on their employees.
I don't know anybody back in Indiana, in the city or on the farm, who thinks that raising taxes on their small business owner boss is going to put them back to work or get them back to full-time.

AMANPOUR: We've got one -- time for...

(CROSSTALK)

STOCKMAN: Two years after the crisis on Wall Street, it has been announced that bonuses this year will be $144 billion, the highest in history. That's who's going to get this tax cut on the top, you know, 2 percent of the population.
They don't need a tax cut. They don't deserve it. And, therefore, what we have to do is focus on Main Street, and that means getting our house in order fiscally, not tax cuts that we can't afford.

AMANPOUR: On that note, there's plenty to talk about, and we're going to see it develop in Congress pretty shortly all of this. David Stockman, Mike Pence, thank you so much, indeed, for joining us.

STOCKMAN: Thank you.

AMANPOUR: And the roundtable will be up next and looking back 50 years to another historic election. Stay with us.

AMANPOUR: We're back with our roundtable. Joining us this morning, George Will, Senator Evan Bayh of Indiana -- who's retiring at the end of this Congress -- George Podesta, president of the Center for American Progress, former White House chief of staff for President Clinton and also led the transition for President Obama -- hard to believe that that was two years ago -- Matthew Dowd, former strategist for President Bush, and Amy Walter, ABC's political director.
Thank you all for being here.
Let me ask you all the first question, which is, is there a possibility of compromise going ahead or gridlock?
George?

WILL: I think there will be gridlock, because the object is to control the presidency in our presidential system, and the presidential campaign has now begun.
The first question confronting them when they come back up there in a few weeks will be extending the Bush tax cuts. The Democrats will try and decouple the question of those for under $250,000 and those over; Republicans will refuse to do that. It will either be settled now in the lame-duck session or afterwards and will be retroactive in any case.

AMANPOUR: And, John Podesta, who I wrongly called George Podesta -- I don't know what was going through my mind, I was looking at George Will...

BAYH: He's been called worse.

PODESTA: Absolutely.

AMANPOUR: Gridlock or any chance of any solutions in this new Congress?

PODESTA: Well, I think you heard President Obama in the days after the election saying that he wanted to try and reach out and find a way to find some areas to compromise. And I think the Republicans now have a responsibility to come forward and be partners in governing, particularly in the House, where they're going to have to put some -- some of their own ideas on the table and not just be the party of "no."
But, you know, I think we're still in a kind of poisonous political atmosphere, so I don't hold out tremendous hope to see things going forward. I think one of the early tests will be whether the Senate will take up the new START treaty, which has bipartisan support in a lame-duck session.

AMANPOUR: Well, you heard -- you heard Rand Paul say he wouldn't vote for it, because, of course, that would be coming in January. Go ahead.

DOWD: I think there is a possibility of -- of reaching compromise, whether there's a probability of it. But the interesting thing from a political standpoint, just look at the political dynamics. It is in President Obama's best interest and the people that were just elected, the Republicans' best interests, to compromise and get something done, because the country basically keeps saying over and over and over at each election, "Do something. Cooperate. Get it done." And they keep sending wake-up call after wake-up call. And if the Republicans -- new Republicans in Congress paid heed and Barack Obama paid heed, they would get something done.

BAYH: I agree with that, Christiane. The question here is whether enlightened self-interest can triumph over the ideological polarization we now have in the country.

AMANPOUR: Which you've just written about.

BAYH: Well, yes. And it's going to be very difficult for moderate Republicans when they see Bob Bennett taken out in Utah, what happened to Lisa Murkowski in Alaska or to Mike Castle in Delaware, to compromise with the president. They'll face an uproar in their own party. And in my party, many of the moderates were obliterated.
So I think we can actually make progress on some things. Tax reform may be one of them, education reform another. But on the -- the big things, I think George is right. There will probably continue to be gridlock, fight it out running up to the next election.

DOWD: But ultimately -- ultimately the president of the United States -- I know the Democrats like to say it's the Republicans' fault that we haven't done this and all -- and the Democrats said the same thing about President Bush in his presidency, the reason why there wasn't more compromise, because his -- his fault.
Ultimately, I think it's -- it's contingent upon President Obama reaching across the aisle in a real, credible way and trying to bring Republicans along. He has the biggest megaphone. It's up to him to do it.

AMANPOUR: I've got to bring Amy Walter -- and I want to -- but I want her to react to this. We're going to put up what President Obama will be saying on "60 Minutes" this -- this evening and also what John Boehner will be saying, the next speaker of the House.

(BEGIN VIDEO CLIP)

OBAMA: We were so busy and so focused on getting a bunch of stuff done that we stopped paying attention to the fact that leadership isn't just legislation, that it's a matter of persuading people.

BOEHNER: There seems to be some denial on the part of the president and other Democrat leaders -- you would think that the other party would understand that the American people have clearly repudiated the policies that they've put forward the last two years.

(END VIDEO CLIP)

AMANPOUR: Amy Walter, political director at ABC, what did the voters say as they came out? Did they repudiate one party, both parties? What did they say?

WALTER: Well, I want to follow up on both what Matthew and Senator Bayh were saying, which was, you know, the problem with -- with midterm election, wave elections, is that what it tends to do is wipe out the people in the middle.
2006 wiped out almost all -- and 2008 -- almost all moderate Republicans left in the House and the Senate. And the same thing happened in this election, with -- with moderate and conservative Democrats.
So now what we're left with is two very polarized parts of this Congress who see no reason to compromise, because fundamentally they got elected by their base. So I think that's a very big problem.
The second piece in terms of what's going to happen, who needs to compromise, how does this work, fundamentally, I mean, we can bring Dr. Phil into this debate, we can bring Oprah in about the psychology of all this, but fundamentally it's about the economy.
This was a fundamental repudiation, if it was of anything, it was that we have a struggling economy, we have 9.6 percent unemployment. And what voters saw for the last year-and-a-half was a lot of infighting in Washington. They saw debate about issues that, quite frankly, didn't impact them personally. They didn't see the benefits to that.
Yes, they saw a lot of money going out the door, that -- you know, Congress writing a lot of checks that didn't come directly back to them. That's a lot of what this election was about.
But what they're saying, fundamentally, especially what independents are saying is, if you guys, meaning the Republicans, the new people who are in charge now in the House, and Democrats, control the White House and the Senate, can't figure this out, we're going to throw you all out again.

AMANPOUR: Well, there you go. That's -- that's my point again. What did they say? And it's not just giving a mandate to one and just repudiating another. People who I spoke to on the road during the campaign wanted more than anything for both sides to come together and figure out a solution to their problems.
WILL: But the narrative of the Democrats, from the president and to the former and perhaps soon to be again Speaker Pelosi, have adopted is, there's nothing wrong with our policies. The election had nothing to do with the substance of government. It was all a terrible misunderstanding because we made some communication mistakes.
I gather tonight on "60 Minutes," the president will say he has to master the art of couching his arguments in ways the people can understand, so it's fundamentally a problem with the American people.

AMANPOUR: Is it -- is it that? Is it -- is it a messaging problem? Or is it a real political problem of not having brought along the American people?

PODESTA: I think the president's real political problem is stuck in what Amy said, the 9.6 percent unemployment rate. He inherited a mess. I think everybody gives -- understands that. But I think everybody is tired of hearing about that.
The question is, what's going to happen tomorrow? And he has to have a credible plan to move the country forward, to get jobs growing again, to get wages growing again, and to get the deficit under control. And I think he's going to reach out to try to find some partnership with the Republicans. Whether they're willing to try to work with him on that is still anybody's guess.

BAYH: The real problem, Christiane -- the political process is not delivering the results the American people want. We've got systemic dysfunction because of the ideological polarization. Most people want practical problem-solving in the middle. That's not what we're getting right now.
So the independents went 8 percent for the Democrats two years ago; this time, they went 15 percent for the Republicans. I think John's right. They're likely to go back and forth until they see the kind of progress they want.

AMANPOUR: The tax battle is going to be a big one. It's going to come up pretty soon. Let me just play you what Warren Buffett has said about this, as we heard from Rand Paul, we heard David Stockman and Mike Pence talk about it. Let -- let me just say what Warren Buffett thinks.

(BEGIN VIDEO CLIP)

BUFFETT: We're going to have to get more money from somebody. Now, the question is, do we get more money from the person that's going to serve me lunch today or do we get it from me?

(END VIDEO CLIP)

AMANPOUR: Well, there you go. That's the question. And this to you, is progressive politics dead? Are your liberal ideas dead?

PODESTA: Well, I think that, two years ago, people thought there was an ascendancy. And two years from now, we'll see whether the president can -- can restore his standing with the American people and move the country forward. So I don't think it's dead.
I think you had -- you had an electorate that was skewed very much differently than it was in 2008, but he's going to have -- as I said -- to come forward and -- and not only try to find compromise, but I think he's going to have to fight for principle, too. And I think that's where this tax fight is really going to -- that's where the rubber's going to hit the road.
He said -- President Obama's answered that question. He said we're going to take that money from millionaires. The question is whether he can offer the Republicans something in exchange.
I think one of the ideas that -- that he could substitute for tax cuts for the very wealthiest Americans is perhaps a payroll holiday, which the Republicans have endorsed, which would actually create more jobs. So there's going to have to be some give-and-take, but I think there's also got to be principle underlying that.

DOWD: To me, the fundamental problem -- the fundamental problem in this, right now, I think -- and both parties have huge credibility problems on this issue from different perspectives on it -- the problem is of asking people to pay more in taxes to a government they don't trust is never going to work.
Until they trust that the federal government can get the job done efficiently and effectively, they are not going to want to put more money in the system.
But if you're a Republican, in order to maintain some level of credibility, if you want to extend the Bush tax cuts, in my view, then you have to say, we're going to extend this, but we also have to cut this in order to even the score, because if you want to fight the deficit, you can't do both.

BAYH: This is an important point Matt just made. The Democrats, we have to address the deficit. If you look what was driving independents, the people who voted in Massachusetts for Scott Brown, and even to this election, it was the deficit and the debt. The economy, but the fiscal problems.
Our solution to the fiscal problems can't only be tax increases. We have to stand for spending restraint, as well.
And Matt's point, back in -- in the Clinton time, remember reinventing government? They understood we have to convince the taxpayers, show the taxpayers that they're getting value for their dollar. That's very important.
The final thing I'd say, look at the U.K. A coalition government comes in. You've got conservatives coming in. They don't like tax increases there, either, so their solution was 75 percent spending restraint. But once they got that, they then put 25 percent revenue on the table. So a compromise can be worked out.

AMANPOUR: Well, yeah, and they're -- they're saying there, for every $3 in tax -- in -- in spending cuts, $1 up in taxes.

BAYH: And that's a conservative government.

AMANPOUR: Precisely. At all a goer (ph)?

WILL: No. What the Republicans will say is, if you extend all the Bush tax cuts, you will still be raising as a percentage of GDP about 18 percent in federal revenues, which is slightly above the postwar norm. The Republicans do not think we have a tax -- problem of too low taxes, but too much spending.

AMANPOUR: Let me just go to Amy Walter. Amy, there was a lot -- and we saw a lot of the Tea Party candidates and many of the candidates presenting for election this time were women. But the net result is not more women, is it? Tell us what's happened with the women vote and the women representation.

WALTER: Yeah, no, it was very interesting. I mean, the net result, in terms of Congress, there -- for the first time in 30 years, there are fewer women in Congress.
But I do think it's -- an important point is, who is visible, the women symbolically who are out front right now, and who are we talking about now, less than a week away from Election Day? We're talking about Nancy Pelosi. We're talking about Sarah Palin. We're talking about the first woman Hispanic elected to the governorship in New Mexico. We're talking about the first Indian-American woman elected in South Carolina as governor, Nikki Haley.
So while the numbers themselves weren't particularly good for women, the fact that more women are sitting at the table -- in fact, the other person I forgot to mention is Michele Bachmann, self-appointed Tea Party activist and leader in the House, who is challenging the Republican establishment there for a seat in the caucus.
So I think while, you know, we may not see the numbers that have increased, what we do see is more women who are making very important and very -- are very much upfront in this process.

DOWD: And I think that's an important point. Though there's less women going to be serving in Congress up the street here, the interesting thing is there's going to be more women serving in governor's offices. The first woman governor of South Carolina, the first woman governor of New Mexico, the first woman governor of Oklahoma.
And in those places, where people actually trust the state to do something, as senator, former Governor of Indiana Bayh knows, that people actually go -- they're looking to the state governments much more than Washington, D.C., to solve the problems in their life because they trust it.

AMANPOUR: Let me ask about a very prominent woman, Nancy Pelosi. Is it in the best interest of your party that she is taking this leadership fight now?

PODESTA: Well, I think that the Republicans spent millions of dollars demonizing her.

(CROSSTALK)

(UNKNOWN): ... on her own.

PODESTA: They're all now popping champagne corks. But I think I'd -- if I were them, I'd calm down a little bit, because she did take the House back from them.
She's got the majority in the House. She's -- she's tough, disciplined, a great fighter. That's how she produced the legislative achievements that President Obama asked her to produce. And what she needs, I think, is balanced leadership, and that's still -- that's a challenge that she's going to have to face now.

BAYH: It'll be a big topic in this town, but (inaudible) American people really won't care. The right will continue to demonize her. But since she's not in a position to actually implement things, that won't matter so much, and she's very good inside at raising money and those sorts of things, so I think it's really a non-issue.

WILL: Her caucus will be smaller, but much more liberal, so it will support her. And she will also have the support of the Republicans, who would like her to stay.

(UNKNOWN): Right.

BAYH: Finally, bipartisanship.

AMANPOUR: There you go. We achieved it.
And President George W. Bush's book is coming out this week. There are interviews; there's all sorts of reviews. And no doubt, perhaps, you'll talk about it in the roundtable in the green room at abcnews.com/thisweek, where you can also find our fact checks by PolitiFact.